Madison Wisconsin's Estate Planning Blog

Over the years, we’ve discovered that many people make a BIG mistake, catapulting their assets and loved ones right into the court system.  Most of our clients want to avoid probate because it has a reputation for being expensive, time consuming, stressful - and public, meaning anyone anywhere can see who got what and how to contact them. Beneficiaries may become victims to nosey neighbors, predators, and unscrupulous “charities.”

Q:  What’s the one mistake that causes all these problems? 

A:  An unfunded trust.

In this issue you will learn:

• What it means to fund your trust
• What happens to assets left out of your trust
• Which assets should, and should not, be funded into your trust
• How funding your trust will ensure your final wishes are carried out and save your loved ones valuable time, money, and the frustration of going to court – while preserving privacy

As the federal estate tax exemption has ballooned from $1.5 million ten years ago to $5.43 million today, the need for estate tax planning has drastically decreased.  Instead, higher income tax rates that were ushered in under the American Taxpayer Relief Act of 2012 (ATRA) have shifted the focus of estate planning to a new frontier:  income tax basis planning.

In this issue you will learn what income tax basis is, how older estate plans have been deliberately designed to include an income tax time bomb, and the options you have to update your plan so that your heirs will receive the maximum basis.

Everyone has heard of wills and trusts. Most articles written on these topics, however, often presume that everyone knows the basics of these important documents. But, in reality, many of us don’t – and with good reason – as they’re rooted in complicated, centuries-old law.

Let’s face it, if you’re not an estate planning attorney, these concepts tend to remain merely that – concepts. So, if you’re “fuzzy” about wills and trusts, know that you are not alone.

It’s counterintuitive, we know: irrevocable trusts are revocable (and amendable). Unfortunately, irrevocability is a malicious myth. The uninformed could spend years relying on an old, out-of-date trust that could be updated and improved without too much effort. Yes, the so-called “irrevocable trusts” absolutely can be, and, often, should be, modified. 

In this issue, we’ll identify:

• 10 reasons you may want to modify your irrevocable trust
• 5 ways to modify your irrevocable trust
• 3 circumstances when trust modification should be considered
• When to contact our office to have your trust reviewed for potential modification

Income tax basis may not be the most exciting topic to read about.  However, it is a critically important topic to anyone who owns significant assets.  Gaining an understanding of the basics of basis is a way to avoid costly mistakes.

The Real Meaning of Basis

According to IRS Tax Topic 703, your basis “is generally the amount of your capital investment in a property for tax purposes. Use your basis to figure depreciation, amortization, depletion, casualty losses, and any gain or loss on the sale, exchange or other disposition of the property.

Studies have shown that 70% of family wealth is lost by the end of the second generation and 90% by the end of the third.  Don’t let your loved ones become part of these statistics. You need to understand, and work to overcome, the disconnect that occurs between generations regarding the transfer of wealth.  In this issue you will learn:

• The main factors that contribute to family wealth loss over the generations.
• How you can overcome your reluctance to discuss your wealth with your loved ones.

Estate planning for couples in a second or later marriage can be tricky, particularly when one spouse is significantly wealthier than the other. One solution for allowing the well-to-do spouse to maintain control of his or her assets but keep the other spouse happy is the Lifetime QTIP Trust. In this issue, you will learn what a Lifetime QTIP is and the multiple benefits this special type of trust can provide to you and your spouse if you have lopsided estates.

We rely on our friends, family, and colleagues to help us through life’s challenges. These trusted individuals can also be incredibly important when setting up an estate plan. It is vital to appoint a fiduciary to act on your behalf. A fiduciary acts on your behalf, carrying out your wishes should you become incapacitated or pass away. Legally bound to make decisions with your best interests in mind or in accordance with your written instructions, the fiduciary is invaluable in times of uncertainty.

Many people select a single fiduciary to manage their affairs. However, the amount of time associated with the role can be overwhelming for some people. When deciding who to appoint as fiduciary, be mindful of the degree of effort associated with maintaining and managing your affairs.

Congratulations! You are now considered a legal adult. Aside from purchasing alcohol, there is now very little you cannot legally do. Even though you may not feel any different, from a legal standpoint, a lot has changed.

When you were a minor (under the age of 18), your parents were considered your legal guardians and were responsible for making all of your decisions for you. Now that you are an adult, their legal authority is very limited if not completely gone. Although this new found freedom may sound exciting, there are a few things you need to consider: